Facebook: "Beating The S--- Out Of Its Numbers" Thanks To Zynga's Virtual Goods

Making Facebook games like FarmVille and Texas Hold'em and then selling its users virtual goods to help them advance in the games, Zynga is pulling revenues over $500,000 per day, All Facebook reports.

To keep that momentum going, Zynga then turns around and spends a big chunk of that money -- "a reported $50 million," writes All Facebook -- on Facebook ads.

For years, tech industry watchers wondered if any American startups would ever make money selling virtual goods the way many companies in Korea and Japan do. Now Zynga and Facebook are marching toward IPOs on the back of that suddenly booming business.

Lots of Facebook insiders think the company could double-dip into this burgeoning virtual goods economy by building a "Pay With Facebook" PayPal-killer. But recent reports suggest that a payment platform is at least a year or two off.

All Facebook reports this profitable relationship between Zynga and Facebook is also a very cozy social one. Whatever it takes!

AF: A company’s success on Facebook revolves around three factors: ability to maximize viral channels (to drive new users), the ability to create an effective internal engagement loop within an application, and access to an open communication channel with Facebook’s platform people.

Zynga has all three of these and they have an extremely tight relationship with Facebook through private parties (which are buzzed about heavily) and through committing to large ad buys. In other words they’re helping out each other. As many developers have noticed, Zynga has managed to own entire sets of ads on a single page sometimes. In other words, all “three” advertisements on a single Facebook Page will link to Zynga’s Mafia wars game.